private practice business model

[Osteoth]

My post two years ago is a fairly comprehensive review--little has changed, except bending in the favor of MDs. "In the best circumstances", it takes a lot less than 3-5 years to fill cash practices now. I may sound like a weird traditionalist, but IMHO the easiest way (as you say "the common variable") to get a high-end cash practice is to do a high end name brand residency, which means treat this pathway as basically the same as derm (best grades, best scores, best sub-I letters, best research), and if you can't do a name brand residency, do a name brand fellowship (those are super non-competitive). The cat is out of the bag, everyone at top (and for that matter, non-top) residencies in wealthy areas want to do at least some cash practice, and academic faculty practices started to do this not taking insurance thing (smh). So, if you just go to one of those places where nobody takes insurance (including faculty), you'll just learn by osmosis. And this is in an environment of Kaiser paying 300k mailing ads for jobs at bad locations only write down numbers if > 350k. Nevertheless, there are still plenty of people working at state facilities for 180k for a variety of reasons. SDN comments are essentially useless outside of very gross generalities.

Also, I'm not the first one to say these things, but be VERY careful with picking jobs based on perceived ceiling salary/lifestyle. This can change very quickly (see rads, gas) because of big pictures issues (i.e. if the insurance starts to pay a higher premium for facilities driven "integrated care" services, like in the HMO acquisition spree in the 90s for PMD). Sure psych is great right now, but this can ALL change. Please make sure you actually like psych and diversify what you might be happy with other than high end cash. High end cash is not something everyone even from top residencies can do and you are for sure taking a risk if you go into psych thinking you're gonna do high end cash. Please don't be stupid.

So I would assume that brand name means programs an uninformed civilian would recognize, aka Harvard, Penn, Yale etc? Would places like Menninger in Tx or UPMC at Pitt "earn" less credibility in your mind?

Also, thats understandable, but one is interested in doing mostly private practice therapy, then that I assume would be achievable? Obviously salary depends on payer mix.

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[dl2dp2]

So I would assume that brand name means programs an uninformed civilian would recognize, aka Harvard, Penn, Yale etc? Would places like Menninger in Tx or UPMC at Pitt "earn" less credibility in your mind?

Also, thats understandable, but one is interested in doing mostly private practice therapy, then that I assume would be achievable? Obviously salary depends on payer mix.

Location specific: if you work in a suburb of Houston, Menninger (i.e. Baylor) is just as good as Harvard. If you live in LA, maybe not, WHO KNOWS... maybe a Menninger guy faculty at UCLA and specializes in X Y Z could outcharge a run of the mill Harvard (which one? there are at least 4) grad. Pitt (the city) is hard to support such a practice. Pitt (the program) is awesome: great research, hospital is great, great clinical training, etc. This is all just me spilling BS I'm sure there are high end cash in Fox Chapel, it's just not as "common variable". Would need to more carefully evaluate your competitors in a specific market to know. You are making broad assumptions: many well-to-do patients are not "uninformed civilians". There are just more people from top residency going into cash, and hence you just have more exposure to that world should you choose to go into it.

Ceiling salary again...yuck... which I just said is meaningless...definitely >500k. I'm not sure if it's > 1MM. I know personally of people make 500k-750k range all in. As I said in a different thread, not very tax efficient to try to generate 1MM through clinical practice. Per hour for therapy, what's the range? That's also wide, somewhere between $200-500, though lately I've heard reliable sources of people charging $2000 for an intake. Which, by and by I suppose on a economic perspective perhaps is worth more at the end of the day for someone with severe BPD than a hip replacement...

 

[Osteoth]

Location specific: if you work in a suburb of Houston, Menninger (i.e. Baylor) is just as good as Harvard. If you live in LA, maybe not, WHO KNOWS... maybe a Menninger guy faculty at UCLA and specializes in X Y Z could outcharge a run of the mill Harvard (which one? there are at least 4) grad. Pitt (the city) is hard to support such a practice. Pitt (the program) is awesome: great research, hospital is great, great clinical training, etc. This is all just me spilling BS I'm sure there are high end cash in Fox Chapel, it's just not as "common variable". Would need to more carefully evaluate your competitors in a specific market to know. You are making broad assumptions: many well-to-do patients are not "uninformed civilians". There are just more people from top residency going into cash, and hence you just have more exposure to that world should you choose to go into it.

Ceiling salary again...yuck... which I just said is meaningless...definitely >500k. I'm not sure if it's > 1MM. I know personally of people make 500k-750k range all in. As I said in a different thread, not very tax efficient to try to generate 1MM through clinical practice. Per hour for therapy, what's the range? That's also wide, somewhere between $200-500, though lately I've heard reliable sources of people charging $2000 for an intake. Which, by and by I suppose on a economic perspective perhaps is worth more at the end of the day for someone with severe BPD than a hip replacement...

Ok, so basically the name-brand places nation-wide would be good no matter what, and then region-specific places make sense as well.

Makes sense. If the ceiling is that high, I assume the floor would be doing completely insurance-based therapy, which would be ~$300k like you mentioned before?

How the hell can people charge $2000 for intake?!

 

[TexasPhysician]

Ok, so basically the name-brand places nation-wide would be good no matter what, and then region-specific places make sense as well.

While a name-brand can help, it is minimally beneficially in my experience. If you are good with patients and your referral base, patients will come.

Another thought: Most of the US isn't near the coasts where top brands thrive. Maybe it is harder to grow a cash practice in LA after training at Mayo vs Harvard, but the South, Midwest, etc don't seem to care.

 

[nitemagi]

While a name-brand can help, it is minimally beneficially in my experience. If you are good with patients and your referral base, patients will come.

Another thought: Most of the US isn't near the coasts where top brands thrive. Maybe it is harder to grow a cash practice in LA after training at Mayo vs Harvard, but the South, Midwest, etc don't seem to care.

Seconded. People don't seem to care about your pedigree. They care about if 1) You're effective in making them feel better. 2) You're available and responsive (don't make them wait two weeks to return a phone call). and 3) You're actually a real person (likable, human, responsive, not mechanical, not cold).
I actually think you only need 2 of the 3 to build a practice.

 

[Jules A]

A side discussion for my knowledge; how are psychiatrists collaborating with NPs able to make 100-150k/NP extra cash for them on top of overhead? What does this practice model look like? Are physicians signing their notes too to ensure they're getting 100% of the reimbursement rate?

Maximizing use of a NP makes sense and can be profitable if you are able to find the few who are knowledgeable, efficient and business minded. This will require top wages, depending on the area I'd expect to spend at least $100 an hour-W2, and someone who is willing to do medication management only and leave the social work stuff to the therapists you are paying $30 an hour. In my experience finding a NP with significant RN experience on an inpatient acute would be the minimum standard to even engage in conversation. You will want to clearly discuss the stims, benzos, addictions to find if their style and philosophy meshes with yours which assists with seamless coverage and collaboration.

It definitely makes sense to cosign for full reimbursement and actually I believe a pre-set line in notes indicating the person is being supervised by Dr. So and So is sufficient as opposed to actually signing every single note. From a liability standpoint, my guess-definitely check with a lawyer if concerned-would be it doesn't add significant risk as I'd suspect any litigation would be aimed at you for a NP in your practice regardless. This would be a good thread to start on its own.

 

[Shikima]

Maximizing use of a NP makes sense and can be profitable if you are able to find the few who are knowledgeable, efficient and business minded. This will require top wages, depending on the area I'd expect to spend at least $100 an hour-W2, and someone who is willing to do medication management only and leave the social work stuff to the therapists you are paying $30 an hour. In my experience finding a NP with significant RN experience on an inpatient acute would be the minimum standard to even engage in conversation. You will want to clearly discuss the stims, benzos, addictions to find if their style and philosophy meshes with yours which assists with seamless coverage and collaboration.

It definitely makes sense to cosign for full reimbursement and actually I believe a pre-set line in notes indicating the person is being supervised by Dr. So and So is sufficient as opposed to actually signing every single note. From a liability standpoint, my guess-definitely check with a lawyer if concerned-would be it doesn't add significant risk as I'd suspect any litigation would be aimed at you for a NP in your practice regardless. This would be a good thread to start on its own.

Thanks, I'm just not sure what the actual mechanics look like for a 30-40 hr work week NP earning 100k in profit. I'm sure more hours makes it easier, but I think the understanding is there.

 

[dl2dp2]

While a name-brand can help, it is minimally beneficially in my experience. If you are good with patients and your referral base, patients will come.

Another thought: Most of the US isn't near the coasts where top brands thrive. Maybe it is harder to grow a cash practice in LA after training at Mayo vs Harvard, but the South, Midwest, etc don't seem to care.

Seconded. People don't seem to care about your pedigree. They care about if 1) You're effective in making them feel better. 2) You're available and responsive (don't make them wait two weeks to return a phone call). and 3) You're actually a real person (likable, human, responsive, not mechanical, not cold).
I actually think you only need 2 of the 3 to build a practice.

Agree 100% with above. Pedigree is a "common variable", everything else is necessary and sometimes sufficient, and very much geographically dependent. It's likely much easier to start a cash with non-name brand in a wealthy suburb of Charlotte than in the heart of Silicon Valley, and you'd be surprised how little your take home differs in these two scenarios.

Thanks, I'm just not sure what the actual mechanics look like for a 30-40 hr work week NP earning 100k in profit. I'm sure more hours makes it easier, but I think the understanding is there.

It's hard to make 100k profit, but I think if you absorb an NP in a partnership model where this person is willing to take insurance and you bill full fee, you can make a reasonable 50k profit for 1-2 hours a week of supervision. Tho the business side of things might make this more overhead heavy. I think such an arrangement would be more worth it if it's > 1 NP. I know of a thriving group practice that has 2 MDs, 5 PhDs, and 3 NPs. The MDs don't take insurance, the rest do. Interesting set up. I'm sure the MDs owners are doing very well for themselves.

Makes sense. If the ceiling is that high, I assume the floor would be doing completely insurance-based therapy, which would be ~$300k like you mentioned before? How the hell can people charge $2000 for intake?!

LOL, floor is much lower. People work part time all the time. Do you mean if you work 40 clinical hours billing insurance what's your total gross revenue? Medicare 99213+90836 is roughly $150 to $200= $288000, subtract about 20-30% overhead (you'll need a secretary) ~ doing strictly weekly psychotherapy on 40 patients will net you around 200k. Not bad, but not 300k.

 

[Shikima]

Sluox, I know psychiatrists who have NPs working for them and they are earning "profit" to the tune of 100-150k/yr. I'm not sure if this is embellishment as it sometimes can be. Conceptually it is feasible. Going on the grounds that it could be, what are the particulars on that business model. I can't dissect it out.

 

[dl2dp2]

Sluox, I know psychiatrists who have NPs working for them and they are earning "profit" to the tune of 100-150k/yr. I'm not sure if this is embellishment as it sometimes can be. Conceptually it is feasible. Going on the grounds that it could be, what are the particulars on that business model. I can't dissect it out.

I bet you are right. It is interesting isn't it. I'm just telling the OP that the expectation should be lower than 100k. I think if I quit my day job and just focus on developing a practice this may very well be a path to go down to make $$$$$. Too bad I don't particularly enjoy managing people, especially on clinical matters... You only live once and I make enough money as is...

 

[Osteoth]

LOL, floor is much lower. People work part time all the time. Do you mean if you work 40 clinical hours billing insurance what's your total gross revenue? Medicare 99213+90836 is roughly $150 to $200= $288000, subtract about 20-30% overhead (you'll need a secretary) ~ doing strictly weekly psychotherapy on 40 patients will net you around 200k. Not bad, but not 300k.

Interesting. Thats the scary thing because the difference between 200k & 300k is paying off loans like 5-10 years earlier, which can change your whole life...

 

[SteinUmStein]

All of these private practice discussions are interesting and exciting to think about, but I do think the uncertainty and unpredictability of independent practice should be considered, especially for new grads. It's one thing if you have your loans and mortgage paid off to be making plus or minus $50k per year, depending on reimbursement and no-shows and expenses, it's entirely more terrifying to be -$50k for the year from expected because of unpredictable insurance changes, market changes, increased no-shows, staff disasters, etc. Don't forget about funding benefits, retirement, CME, dues, supplies, office expenses, etc, that's coming out of your pocket. There's no doubt, however, that the ceiling is dramatically higher than any employed or staff position, period. And the control and autonomy is yours (or yours + partners). I would guess many long-term private practice people are more interested in the autonomy and self-employment flexibility than just pure desire for $, plus a lot of people love running a business, it's an entirely different and interesting intellectual challenge from medicine/psychiatry.

 

[Psychotic]

All of these private practice discussions are interesting and exciting to think about, but I do think the uncertainty and unpredictability of independent practice should be considered, especially for new grads. It's one thing if you have your loans and mortgage paid off to be making plus or minus $50k per year, depending on reimbursement and no-shows and expenses, it's entirely more terrifying to be -$50k for the year from expected because of unpredictable insurance changes, market changes, increased no-shows, staff disasters, etc. Don't forget about funding benefits, retirement, CME, dues, supplies, office expenses, etc, that's coming out of your pocket. There's no doubt, however, that the ceiling is dramatically higher than any employed or staff position, period. And the control and autonomy is yours (or yours + partners). I would guess many long-term private practice people are more interested in the autonomy and self-employment flexibility than just pure desire for $, plus a lot of people love running a business, it's an entirely different and interesting intellectual challenge from medicine/psychiatry.

I admire the people who go the PP route, especially straight out of residency, but I am not so sure I am cut out for all the responsibility of being a business owner, the hiring and firing of staff, all the admin responsibility. I don't have the requisite entrepreneurial spirit, I'm afraid. Maybe gradually (like an all cash PP one day a week), maybe down the road, but not right out of the gate.

 

[AD04]

I admire the people who go the PP route, especially straight out of residency, but I am not so sure I am cut out for all the responsibility of being a business owner, the hiring and firing of staff, all the admin responsibility. I don't have the requisite entrepreneurial spirit, I'm afraid. Maybe gradually (like an all cash PP one day a week), maybe down the road, but not right out of the gate.

No shame in that. It is not uncommon to work for someone else right out of residency. It may be more prudent to learn the in and outs of private practice on someone else's dime before venturing out for yourself.